Singapore-listed City Developments Limited (CDL) is divesting the Millennium Hilton Seoul hotel to Korean real estate investment manager IGIS Asset Management.
City Developments Limited said Monday that it has entered into a sale and purchase agreement with YD427 PFV Co., Ltd, an entity managed by IGIS Asset Management for the proposed divestment of Millennium Hilton Seoul and the adjoining land plot in Korea for KRW 1.1 trillion (approximately S$1.26 billion, US$930 million).
Located at the foot of Mount Namsan and within walking distance to Seoul’s downtown business district, the 5-star, 22-storey Millennium Hilton Seoul is operated by Hilton Hotels & Resorts under a management contract. The hotel building comprises 680 guest rooms and 29 suites, a business centre, fitness centre, pool, area used for the casino and retail shops, restaurants and bar facilities and other associated facilities and amenities.
Opened in 1983, the hotel was previously owned by Daewoo Group before it was acquired by the CDL Group in November 1999 for US$213.5 million following the Asian Financial Crisis. In 2013, CDL Hotels (Korea) Limited acquired the adjoining 1,563.7 square metre freehold land plot from Woo Yang Industrial Development Co. Ltd. for KRW 29.5 billion.
Kwek Leng Beng, Executive Chairman of CDL and M&C, said, “Ever since I led our foray into the hotel industry in the 1970s, we have amassed a portfolio of valuable assets through strategic acquisitions and geographical expansion. Many of these assets have been held at book value for decades.
Since acquiring Millennium Hilton Seoul in the late 1990s, we have steadfastly invested in the hotel, driven optimal performance and extracted good value from the property. We have always believed that this would be an asset that could provide tremendous value to shareholders at the right time and at the right price.
We received several unsolicited offers and negotiated hard to maximise value. This sizeable divestment at a significant premium to book value was the impetus to sell without hesitation and realise a substantial profit. The proposed divestment is in line with our capital recycling commitment to realise the deep, latent value from our assets.
We remain confident of the global hospitality recovery with pent-up demand. We will continue to review and fine-tune our portfolio to accelerate the group’s growth and transformation while enhancing shareholder value.”
Upon completing this proposed divestment, the group is expected to recognise an estimated gain in the income statement of S$529.73 million, net of taxes and related transaction costs. This is expected to positively impact the NAV per share and earnings per share of the group.
The proposed divestment is expected to be completed in Q1 2021.
